Posts archive for January, 2013

Each week, we seek out expert advice to help a small or medium-sized company overcome a key issue.

Jad Saliba doesn’t want his company to be a one-hit wonder.

Mr. Saliba, a former constable with the Waterloo regional police, is the founder and chief technology officer of Waterloo, Ont.-based Magnet Forensics Inc. The company, which sells digital forensics software to law enforcement and government agencies and corporations, was originally founded in 2009 as JADSoftware Inc.

It has grown rapidly over the past year and a half, with the number of employees jumping to 25 from three. Sales have also been rising fast, to about $3-million in 2012 from $648,576 in 2011.

All this has come from a single product: Internet Evidence Finder, the software used to help in crime detection by more than 1,200 customers, ranging from Bank of America to the U.S. Department of Homeland Security.

“We have this flagship product that’s doing quite well, and there’s so many more things that we could be doing with it,” Mr. Saliba says.

“But, at the same time, we have other product ideas. Some of them are complementary, and some of them are brand new ideas for different products.”

What he knows is, “we can’t just stay with one product forever.”

Mr. Saliba isn’t sure how to balance his development dollars. He knows that Magnet needs to continue to maintain and improve its core product. While he also wants to move beyond it, he doesn’t want to sink too many resources into new and unproven product ideas.

“Until you release a product and you start making sales, you’ll never really know how successful it’ll be,” he says. “I think it’s really risky for a company to start diverting resources from something that’s proven and is doing well to new projects.”

A year ago, Mr. Saliba was the company’s sole software developer. Now that he has an 16-employee development team, “these other products are becoming possibilities.”

“It’s just a tough decision on how many people to divert to these other projects, and how quickly to start diversifying.”

Mr. Saliba worries that if he can’t find the right balance, he could risk falling behind in the rapidly moving world of digital forensics.

“I think there are dangers on both sides: one of losing current customers and current revenue, but the other of losing future customers and future revenue.”

The Challenge: How can the company best balance its desire to move forward on creating new products while continuing to improve on its core one?

Before adding a new product, you really have to consider the amount of effort it will take. For example, if you are a distributor, adding another product doesn’t take too much effort. On the other hand, if you are a manufacturer, the effort is a lot more. In the software space, in the current super-competitive environment, I would say software takes even greater effort. You have to consider all the platforms and how those platforms will play out in the next two to five years.

I equate launching a new product like a rocket lifting off. A rocket burns a heck of a lot of energy at lift-off, yet it still needs energy for its ascent. The only time you want to take energy and momentum away from a rocket in flight is if you know it’s going to crash. Is your main product on a trajectory that will crash? If you take energy away from it, will it crash? These are questions only you can answer after some deep thought.

Based on your revenues and the number of people you have, I would shy away from adding more products. I would make sure IEF is the top dog on the main platforms your customers will be using in two to three years.

The most important thing to keep in mind is that the voice of your customers is critically important to your future success. One place to start looking at how to move forward is to pull together an informal advisory group made up of existing and potential new customers for a brainstorming session. It’s amazing what you can learn about their needs and what new products they may, or may not, be willing to pay for. Just ask them – they will tell you.

You should also be mindful to make any new products complementary to your existing offering. Don’t sacrifice the core product for the sake of a new one. You have paid a big price to get the customers you have, and, ideally, they will also be customers for any new products that you create. They are the ones that ultimately write the cheques and vote with their wallets. You obviously want their votes locked in.

When you develop a new product or service, make sure it is something that is consistent with what you are known for within the forensics realm and where you have credibility. You should already know what works and what doesn’t and what’s already out there. It’s important you innovate, not replicate. Make yourself a market leader and not just someone offering up an “us too” solution.

The choice on how to expand, and where to focus the resources necessary to expand, is one every growing company faces. You have already made a tremendous investment in time and resources to develop your existing customers, marketing and brand equity. It is necessary for you to leverage that investment to enable your growth.

Developing new products is exciting and rewarding, but potentially disruptive. Do not allow yourself to become paralyzed by overthinking the pros and cons of adding a new product. A key advantage that a small business possesses is agility. Take small, separate teams and allow them to develop a prototype or explore a new idea. Small investments will help you determine if they are worth larger-scale investments. Keep your core team focused on improving your current product to keep existing customers happy and continue generating revenue. Above all, be prepared to change course quickly. Drop projects quickly if they are failing, or switch focus to one which is showing promise.

When determining which new products to develop, prioritize products that complement your existing product. By broadening your core product line, you have an opportunity to develop additional revenue streams while taking advantage of your current sales and marketing channels. It is more important to have a strong, differentiated product line than to have a broad set of unassociated products. THREE THINGS THE COMPANY COULD DO NOW

Brainstorm with customers

Put together an informal advisory group of current and potential customers to ask about their needs and what new products might fulfill them.

Stick with complementary products

Don’t sacrifice a core product for a new one. Make something new that complements what you already have and builds on your knowledge, reputation and credibility. Innovate, don’t replicate.

Start small

Create a separate team to explore new ideas or develop prototypes. Small investments will help determine whether you should make bigger ones. Keep your core team focused on your core product.

Facing a challenge? If your company could use expert help, please contact us at smallbusiness@globeandmail.com Join The Globe’s Small Business LinkedIn group to network with other entrepreneurs and to discuss topical issues: http://linkd.in/jWWdzT. Our free weekly small-business newsletter is now available . Every Friday a team of editors selects the top picks from our blog posts, features, multimedia and columnists, and delivers them to your inbox.

Sam Macdonald recalls with a chuckle taking her company’s remotely operated submersible vehicle to Tobermory on the Victoria Day long weekend last year.

She plunked herself down on the dock, pulled the Deep Trekker out of a box and waited.

Within 15 minutes she was “swarmed” by curious boaters and salvage-craft operators.

Some persuasion was needed before she could hitch a ride on one of the salvage boats, but after the captain saw the Deep Trekker motoring around a sunken wreck and even cruising through a window, he bought one that weekend and so did an ice diver.

It’s been that way ever since Macdonald and her two partners, Jeff Lotz and Shawn Pette, started selling the Deep Trekker in 2011. Their company also is called Deep Trekker.

Once customers get a chance to see the versatile little machine in action, sending up crystal-clear video from as deep as 150 feet, they can’t wait to get their hands on one.

Deep Trekker’s first sale came all the way from Norway. Lotz, who designed and built the little sub, had posted photos on the company’s website.

A dealer in Norway, who supplies equipment to the booming fish farm industry in that country, spotted it and ordered one. Once he’d seen it in action inspecting fish cages and the eating patterns of fish, he ordered a few more. Norway is now the company’s biggest market.

“That scared me a little,” says Lotz, who wasn’t expecting his first customer to come from so far away.

The origins of the Deep Trekker go back to Lotz’s days as a mechanical engineering student at Conestoga College.

When a power boat roared past his canoe in the Kawartha Lakes, dumping the boat and all its contents, he resolved to build a remotely operated vehicle to retrieve the valuables. The vehicle would also serve as a school project.

His creation, the first Deep Trekker, took hundreds of hours to build and won an award at graduation ceremonies in 2003.

Lotz planned to further refine the sub for sale on the open market, but got so busy with his day job as a product designer at Tigercat Industries, a forestry equipment manufacturer in Cambridge, that he had to put the Deep Trekker on hold.

When work slowed during the recession of 2009, he turned his attention back to the little submersible. At that time, the cheapest remotely operated sub on the market sold for $10,000.

The son of a Fergus millwright, Lotz thought he could make one at a lower cost by eliminating one of three thrusters that power the vehicles below the surface. “I thought pretty long and hard on how to do that,” he says.

The design he came up with changed Deep Trekker from a cumbersome-looking, three-hulled craft into a smaller, circular vehicle with two thrusters and a band of glass around the middle where the camera sits.

Other innovations included a custom-made computer to process images, a high-brightness monitor to receive the images above the surface, batteries on board the sub and a lighter tether cable attached to the vehicle.

The resulting craft, which Lotz calls the DTG2 for Deep Trekker generation two, took about three years to develop in the basement of his Ayr area home.

A lymphoma cancer diagnosis slowed him down in 2011, but sales picked up last year after Lotz made a full recovery and Macdonald joined the company. A marketing veteran in high-tech, she boosts morale when design problems appear insurmountable.

” ‘Boys, how hard can it be?’ is my favourite line,” she says. “And next week, it’s done.”

Much of the credit has to go to Lotz, who has a remarkable work ethic, Macdonald says. “Jeff has more GSD – get stuff done – than anyone I have met in my entire life.”

The company’s website helped to spread the word along with its attendance at a diving show in Las Vegas and a yacht show in Fort Lauderdale. In 2012, the company sold 110 Deep Trekkers, ranging in cost from $3,000 to $7,500, and now has customers in 18 countries.

Customers have included the St. Lucie nuclear power plant in Florida and NASA, which uses a Deep Trekker to simulate a weightless environment underwater.

The company was bootstrapped using the founders’ own funds, and parts are designed in-house and sourced from suppliers in North America and Asia. Everything is tested and assembled in Ayr, including a water pressure test using a portable tank.

Deep Trekker, which has three part-time employees, in addition to the three partners, is looking to move to a larger facility in the spring.

TopHatMonocle Corp., dba Top Hat Monocle, a developer of an interactive education software tool, has raised $1.1 million in add-on financing from Felicis Ventures to its recently closed Series A round of financing, bringing the total Series A fund raised to $9.1 million.

Top Hat Monocle has to date raised over $10 million from investors including Emergence Capital Partners, iNovia Capital, SoftTech VC, Boris Wertz’ Version One Ventures, Golden Venture Partners, and York Angel Investors.

“They know the space really well and mobile is a big focus for them as well,” according to Andrew D’Souza, COO of Top Hat COO. “We heard their vision for what higher education will look and we share a similar vision.”

Top Hat Monocle provides a web-based clicker and online homework tool. Students can use any device to participate in class or for homeworks.

Top Hat Monocle charges students $20 per one semester or $38 for five years’ access. All of the student accounts can be used across multiple courses. Access is free for teachers.

Top Hat Monocle has increased its staff counts from 20 to 70 following the closing of its Series A in June 2012. The company has also doubled the number of participating colleges to 285.

Clearpath Robotics’ Husky A200 has joined Dr. Jean Hunter and Dr. Kim Binstead, for a two week training session at the Mars Desert Research Station in Utah in preparation for the four-month Hawaii Space Exploration Analog and Simulation (HI-SEAS).

Clearpath Robotics‘ Husky A200 Unmanned Ground Vehicle (UGV) has joined Dr. Jean Hunter (Cornell University), Dr. Kim Binstead (University of Hawaii), and six crew members for a two week training session at the Mars Desert Research Station in Utah in preparation for the four-month Hawaii Space Exploration Analog and Simulation (HI-SEAS).

Beginning in April, HI-SEAS will bring volunteer crew members together in a simulated Mars environment for 120 days to research new forms of food and food preparation for long-term space missions. Additionally, Simon Engler, from the University of Calgary, will be on hand with the Husky A200. Engler will be focusing on astronaut-robot interaction and robot companionship studies.

Playing a key role in Engler’s research is Clearpath Robotics’ small but mighty UGV, the Husky A200. Already being used for methane detection studies by the Autonomous Space Robotics Lab (ASRL) at the University of Toronto Institute for Aerospace Studies, the Husky’s agility in rugged terrain, combined with its easygoing, user friendly nature, is quickly making it the go-to platform for Mars robotics research around the world. HI-SEAS currently uses the Husky to study robot operation while wearing a dexterity-impeding spacesuit and as a useful tool, for example, for transporting rock samples back to the base station.

“The Husky is perfectly suited to the rugged terrain that will be faced on this, and future Mars research missions,” says Matthew Rendall, CEO of Clearpath Robotics. “Having Clearpath platforms involved in, and trusted for, such important work is a great feeling.”

The HI-SEAS team is currently at the Mars Desert Research Station in Utah for a two week warm up before the official project kick off in Hawaii, and the Husky has wasted no time making friends. “We’re all very excited about the rover, and it’s slowly turning into a 7th crew member” says Crew Commander, Angelo Vermeulen.

About Clearpath Robotics:

Clearpath Robotics is a Canadian startup company founded in 2009 by four graduates of the University of Waterloo’s Mechatronics Engineering program. Dedicated to automating the world’s dullest, dirtiest, and deadliest jobs, Clearpath has found early success, winning the FuEL (Future Entrepreneurial Leaders) Award, TiE Quest’s New Entrepreneur Award, the Shopify Build a Business Award, and taking first place in the 2011 CBET RISE Business Plan Competition. High profile clients such as the Department of National Defense, Canadian Space Agency, US Navy, MIT and Carnegie Mellon University are proving Clearpath really is “Your Unmanned Expert”.

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